📘 Advanced Learning
Futures & Options | Algo & Intraday Trading | Portfolio Diversification | Mutual Funds & ETFs
🔹 Futures & Options (Derivatives)
Derivatives are contracts whose value is derived from an underlying asset like stocks, indices, commodities, or currencies.
- Futures: Agreement to buy/sell an asset at a fixed price on a future date.
- Options: Right (not obligation) to buy/sell at a fixed price.
- Call Option: Right to buy (expecting price rise).
- Put Option: Right to sell (expecting price fall).
- Uses: Hedging, speculation, arbitrage.
- Risks: High leverage, potential big losses.
🔹 Algo & Intraday Trading
Trading styles for short-term gains with high frequency and precision.
- Intraday Trading: Buy and sell stocks within the same day.
- Strategies: Breakouts, Moving averages, Scalping.
- Risks: Very high due to volatility & leverage.
- Algorithmic Trading: Computer programs trade automatically based on predefined rules.
- Benefits: Fast, accurate, emotion-free.
- Example: Buy when RSI < 30, Sell when RSI > 70.
🔹 Portfolio Diversification
Diversification reduces risk by spreading investments across multiple assets, sectors, and geographies.
- Across Assets: Stocks, Bonds, Gold, Real Estate.
- Across Sectors: IT, Banking, Pharma, FMCG.
- Across Geographies: India + Global markets.
- Across Market Caps: Large, Mid, Small Caps.
Sample Portfolio Mix:
- 40% Equity
- 25% Mutual Funds/ETFs
- 15% Gold/Commodities
- 10% Bonds
- 10% Cash/FDs
🔹 Mutual Funds & ETFs
- Mutual Funds: Pool of money managed by professionals.
- Types: Equity, Debt, Hybrid.
- Pros: Professional management, SIP option, diversification.
- ETFs (Exchange Traded Funds): Trade like stocks, track indices or commodities.
- Types: Index ETFs, Gold ETFs, Sector ETFs.
- Pros: Low cost, high liquidity, transparent.
| Feature | Mutual Funds | ETFs |
|---|---|---|
| Trading | End of Day NAV | Real-time like stocks |
| Cost | Higher expense ratio | Lower expense ratio |
| Liquidity | Moderate | High |
| Best For | Beginners & SIP investors | Active traders & passive investors |
❓ FAQs on Advanced Topics
No. F&O involves high risk due to leverage. Beginners should start with equities or mutual funds.
It’s possible, but very risky. Most traders face losses. Proper training, discipline, and risk management are essential.
No. Even retail traders can use Algo Trading if they have coding knowledge or access to ready-made algo platforms.
Ideally 12–20 well-chosen stocks across sectors. Too few increases risk, too many reduces focus.
Mutual Funds are best for SIP and beginners, while ETFs are better for low-cost, flexible investing.
Yes. Index ETFs like Nifty 50 or S&P 500 have delivered strong long-term returns at lower cost.